Even if the term "treatment" could be understood as applying to dispute settlement clauses, an additional territorial limitation may still be capable of excluding international dispute settlement clauses from the scope of the MFN clause

Limitations on the excessively strict application of a treaty provision can be implicit and need not be stated expressly; for example, futility is a recognized exception to jurisdictional prerequisites in international law; however, judically-crafted exceptions must find support in more than a tribunal's policy considerations

When exercising a right provided for in a treaty, a third party like the investor must comply with the conditions for the exercise of that right provided for in the treaty; he or she cannot vary its terms

International Investment Treaties (IITs) > International Law Rules Applicable to IITs > Law of Treaties > Further Problems

Vienna Convention on the Law of Treaties > Article 34 - General rule regarding third States

In principle states are capable of drafting MFN clauses applicable to dispute settlement matters; if, however, the clause is not explicit in this regard, a tribunal must not use policy considerations (such as a tendency for treaty shopping) but an analysis of the IIT text to elaborate its meaning

The fact that an IIT lists certain exceptions to MFN treatment, and there is no exception for dispute settlement clauses, is no indication that the parties intended dispute settlement clauses to be covered by the MFN clause

Interpreting an MFN clause in the context of the dispute settlement clauses of the same IIT, a tribunal may draw the conclusion that taking into account the principle of effectiveness the stipulation of the dispute settlement clause must not be rendered meaningless ab initio by an extensive interpretation of the MFN clause

International Investment Treaties (IITs) > International Law Rules Applicable to IITs > Law of Treaties > Rules of Interpretation > Special Rules of Interpretation

International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Relationship of Standards of Protection Within a Single IIT

Differential treatment does not automatically constitute "less favourable" treatment; dispute settlement clauses in two IITs have to be compared as a whole, not part-by-part; a fork-in-the-road requirement in one IIT is not necessarily better treatment than a requirement to pursue local remedies for a certain amount of time

Interpreting an MFN clause in the context of the dispute settlement clauses of the same IIT, a tribunal may draw the conclusion that taking into account the principle of effectiveness the stipulation of the dispute settlement clause must not be rendered meaningless ab initio by an extensive interpretation of the MFN clause

Further Problems

Limitations on the excessively strict application of a treaty provision can be implicit and need not be stated expressly; for example, futility is a recognized exception to jurisdictional prerequisites in international law; however, judically-crafted exceptions must find support in more than a tribunal's policy considerations

Further Problems

When exercising a right provided for in a treaty, a third party like the investor must comply with the conditions for the exercise of that right provided for in the treaty; he or she cannot vary its terms

Protection of Investors under IITs

Expropriation and Standards of Protection

Most-Favoured-Nation Treatment (MFN)

Application to dispute settlement clauses

Even if the term "treatment" could be understood as applying to dispute settlement clauses, an additional territorial limitation may still be capable of excluding international dispute settlement clauses from the scope of the MFN clause

In principle states are capable of drafting MFN clauses applicable to dispute settlement matters; if, however, the clause is not explicit in this regard, a tribunal must not use policy considerations (such as a tendency for treaty shopping) but an analysis of the IIT text to elaborate its meaning

The fact that an IIT lists certain exceptions to MFN treatment, and there is no exception for dispute settlement clauses, is no indication that the parties intended dispute settlement clauses to be covered by the MFN clause

Interpreting an MFN clause in the context of the dispute settlement clauses of the same IIT, a tribunal may draw the conclusion that taking into account the principle of effectiveness the stipulation of the dispute settlement clause must not be rendered meaningless ab initio by an extensive interpretation of the MFN clause

Differential treatment does not automatically constitute "less favourable" treatment; dispute settlement clauses in two IITs have to be compared as a whole, not part-by-part; a fork-in-the-road requirement in one IIT is not necessarily better treatment than a requirement to pursue local remedies for a certain amount of time

While the ordinary meaning of the term "treatment" is broad, an examination of sources contemporary to an IIT can reveal that the term was most likely not meant to cover dispute settlement provisions

Relationship of Standards of Protection Within a Single IIT

Interpreting an MFN clause in the context of the dispute settlement clauses of the same IIT, a tribunal may draw the conclusion that taking into account the principle of effectiveness the stipulation of the dispute settlement clause must not be rendered meaningless ab initio by an extensive interpretation of the MFN clause

Dispute Settlement Clauses

Waiting Clauses / Duty to Attempt Settlement Before Arbitration

Character of Waiting Clauses

A waiting period is not a procedural rule, but a jurisdictional provision

Consequences of Failure to Observe the Waiting Period

Limitations on the excessively strict application of a treaty provision can be implicit and need not be stated expressly; for example, futility is a recognized exception to jurisdictional prerequisites in international law; however, judically-crafted exceptions must find support in more than a tribunal's policy considerations

There is a trend in public international law favouring the strict application of procedural prerequisites; thus, there is no reason to deem a waiting clause non-mandatory

Investment Treaty Arbitration

Distinction Between Jurisdiction and Admissibility

A jurisdictional issue can be distinguished from an admissibility issue by asking whether the requirement affects the consent to arbitrate

While a tribunal holds an inherent power over procedure, its only inherent jurisdiction is its kompetenz-kompetenz to determine its own jurisdiction; admissibility falls between these extremes

Jurisdiction

Consent by the Parties

A state's consent to arbitration must not be presumed in the face of ambiguity

Admissibility

Further Problems

There is a trend in public international law favouring the strict application of procedural prerequisites; thus, there is no reason to deem a waiting clause non-mandatory

Vienna Convention on the Law of Treaties

Article 31 - General rule of interpretation

General Remarks

Limitations on the excessively strict application of a treaty provision can be implicit and need not be stated expressly; for example, futility is a recognized exception to jurisdictional prerequisites in international law; however, judically-crafted exceptions must find support in more than a tribunal's policy considerations

Article 32 - Supplementary means of interpretation

Limitations on the excessively strict application of a treaty provision can be implicit and need not be stated expressly; for example, futility is a recognized exception to jurisdictional prerequisites in international law; however, judically-crafted exceptions must find support in more than a tribunal's policy considerations

Article 34 - General rule regarding third States

When exercising a right provided for in a treaty, a third party like the investor must comply with the conditions for the exercise of that right provided for in the treaty; he or she cannot vary its terms

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